Lord Mackay of Ardbrecknish: My Lords, in so far as some parts of the Statement were welcomed by the noble Baroness and the noble Earl I thank them. They asked me a barrage of questions and I shall do my best to answer them. It is all very well for the noble Baroness to say at the beginning of her remarks that the problems are difficult. Indeed, they are. If in addition to following her questions I had time to click away at my pocket calculator I expect that I should have found that, if one interprets her questions and criticisms as meaning that she would prefer to spend more money in some of these areas, I had clicked the £88 billion towards £90 billion or £100 billionand all at the expense of the taxpayers. That problem faces any government when they discuss the benefits system.

The noble Baroness began by attacking means-tested benefits in general. I shall read her remarks with interest because the cost of moving to non-means-tested benefits would be considerable and I should probably have to buy a new battery for my calculator.

She rightly agreed with the noble Earl and me about the problem of unemployment and of finding ways of encouraging people back into work and off benefit. She painted a particular scenario about the husband losing his job and the wife giving up work too. In fact, an easement in the jobseeker's allowance will allow a partner to work up to 24 hours per week instead of the present 16 hours and to keep the benefit. We have taken that problem into account.

The noble Baroness and the noble Earl were not pleased with my announcement about the help that will be given to pensioners and others as regards VAT on fuel. Yet on 21st November 1993 her honourable friend Mr. Donald Dewar, who leads for her party in the other place, indicated that the Government must add something to the pension in order to take account of that increase and that they could do so by adding an extra 50p. We added an extra 50p and we are now adding another 50p. The noble Baroness may like to argue about how we arrived at the second 50p, but the simple fact is that there will be £1 more on the pension of a single person and £1.40 on that of a married couple. That would not be available were we not proceeding to help people to meet the extra cost of VAT on fuel. We shall be giving approximately £1.25 billion-worth of help as regards this problem.

The noble Baroness asked whether the receivers of AA and DLA will be compensated. They will, as they were last year, because 90 per cent. of them receive benefits which include compensation. The remainder are likely to be in work or to be better off.

The noble Baroness spoke of housing benefit, as did the noble Earl, and she painted a dismal picture of what she thought would happen. She suggested that the Government's housing policies were to blame because the deregulation in 1988 had caused the escalation. Of course rents have risen, and housing benefit has risen as a result, but we must try to temper that rise. When

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average levels are much closer to £75 per week, taxpayers should not be expected to subsidise those receiving housing benefits on rents such as £350 per week. I read in today's newspaper of such a person paying more than £700 per week. If people choose to live in better quality, more expensive housing they cannot expect the taxpayers, many of whom do not live in such high quality housing, to pick up the Bill.

Of course, to some extent deregulation has caused that problem. However, it has increased the amount of housing for rent by approximately 16 per cent. I believe that reintroducing rent controls would be a retrograde step. The actions that we are now taking will go a long way towards helping those who are living in expensive accommodation. It will not affect people who are living in accommodation that costs up to the average level. Above the average level we shall pay 50 per cent. of the difference. I indicated in the Statement that local authorities will be given money in order to deal with hard cases.

I turn now to our proposals on mortgages. There is a great deal of indication that already a thriving protection insurance market exists and will develop in order to meet the demand that we believe will be placed upon it by the taxpayer withdrawing from the first nine months. Mr. Mark Boleat, the Director General of the ABI, said today that insurance companies will meet the increased demand from new borrowers for this type of insurance, with companies already providing this cover expanding their capacity and possibly new companies entering the market. I understand that today the Abbey National Building Society reported that between 40 and 50 per cent. of new borrowers are taking out a similar type of insurance.

We shall proceed cautiously on that issue and shall consult widely on the package through the Social Security Advisory Committee and directly with the lenders and insurers. I can assure the House that pensioners will be protected. The position of other vulnerable groups will also be considered during the course of the consultation.

The noble Baroness turned to the issue of encouraging people back into work and, understandably, asked whether there was a danger with the NIC holiday that some employers will sack people at the end of the holiday and recruit new people who will also be eligible for the holiday. It will come as no surprise to your Lordships to know that one of the problems in the whole social security field is that when one tries to do good, as we believe we are doing here, a number of identifiable problems crop up. We fully accept that that could be a problem. The detailed monitoring arrangements have yet to be considered but we believe that reputable employers will not do that. If we are right about the need to give such people, most of whom are men, the opportunity to return to full-time work, we hope that, if after a year they prove to be excellent employees, only a foolish employer would go back to the beginning and recruit another employee in order to receive the holiday. Obviously that is a matter that we shall be watching.

The noble Earl asked a number of questions and I suspect that I have covered some of them already. He asked about the staffing of benefits offices. In order to

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speed up the payment of family credit, which we believe is important and is paid from the central unit at North Fylde, extra resources are being provided.

The noble Earl also asked why the holiday will not start until 1996. As I made clear in the Statement, the reason is that we require legislation. He asked whether the back-to-work bonus will incorporate interest accumulated during its accumulation. No, it will not attract interest during that period but it will be tax free when it is paid out, which is important.

The noble Earl made much of a surfeit of pilot schemes. Some of the schemes that I announced today are not pilots. The new premium of £10, the faster payment of family credit and the run-on in four weeks on housing and council tax benefit are not pilot schemes but are being introduced now. The last two schemes are a recognition of the problem that he raised; that is, the expense incurred when people move off benefit and into work. We are aware of that and we hope that those two measures will try to tackle the problem.

On income support hardship payments available to 16 and 17 year-olds and to those waiting for YT or who are unable to work or train, I can tell the noble Earl that they have been uprated in the Statement. I believe that the £815 million spent on YT in Great Britain in 1994-95 represents a considerable investment in our future.

I am pretty certain that I will not have managed to answer every question that I have been asked. However, I believe that what we have here is a package which faces responsibly the problem of looking after those people who need help from the taxpayer and, at the same time, ensures that the cost to the taxpayer does not run out of all proportion to the ability of the taxpayer and the economy to pay.

6.51 p.m.

Lord Boyd-Carpenter: My Lords, I should like, first, to thank my noble friend the Minister not only for reading the Statement but also for the extremely interesting answers that he gave to a very large number of highly complex questions. I know that my noble friend would not for a moment claim that he had dealt with all the points raised. Therefore, the first question that I should like to ask him is whether the Government are proposing to arrange for a full day's debate in your Lordships' House on the Statement and on the proposals therein contained? It is a matter which is of importance to the vast majority of our fellow citizens. It is also a matter upon which your Lordships' House boasts considerable expertise, with a good many people who have served in social security departments who may claim, perhaps, to know a little bit about the subject.

It is most important that we should have an early debate, and a full day's debateI do not mean one of those short debateson the matter. I know that my noble friend will not be able to answer me at this time, but I hope that he will convey to his noble friend the Leader of the House the fact that we feel it very necessary indeed that this House should bring its great knowledge and expertise to bear on a subject which, as I said, is of such great importance to so many of our fellow citizens.

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In the meantime, I should like to ask my noble friend a further two questions. First, I turn to what is being done to counter the evil effects of the proposed substantial increase in VAT on domestic fuel. I must confess that I share the view that has been expressed from the Benches opposite; namely, that the whole proposal is a great mistake and that the Government would be much wiser not to proceed to increase VAT on domestic fuel. However, on the basis that the Government are going to do so regardless of the advice they receive, can my noble friend sayI could not quite follow the figures that he gavewhether the proposed compensation offered will in the average case (and obviously cases will vary) fully compensate an unemployed person for the increase in the cost of his fuel, especially if the weather turns out to be cold? It is important for us to gain some idea as to whether the compensation, which in principle is obviously rightly being offered, will really make a substantial difference and seriously reduce, if not eliminate, the hardship which otherwise will undoubtedly be caused by such a very severe increase in taxation on what is a domestic necessity.

Secondly, my noble friend made no reference to the item in the gracious Speech that the Government are proposing to introduce a measure to secure the equalisation of pension ages for the retirement pension. That was not included in the Statement. It will obviously require legislation, but I should like to know whether such legislation is imminent.